Applus+ Group Results Presentation H1 2016 26 July 2016 1 - - PowerPoint PPT Presentation

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Applus+ Group Results Presentation H1 2016 26 July 2016 1 - - PowerPoint PPT Presentation

Applus+ Group Results Presentation H1 2016 26 July 2016 1 Disclaimer This document may contain statements that constitute forward looking statements about Applus Services, SA (Applus+ or the Company). These statements are based on


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Applus+ Group Results Presentation H1 2016

26 July 2016

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Disclaimer

This document may contain statements that constitute forward looking statements about Applus Services, SA (“Applus+ ” or “the Company”). These statements are based on financial projections and estimates and their underlying assumptions, statements regarding plans,

  • bjectives

and expectations, which refer to estimates regarding, among others, future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the Company. Such forward looking statements, by its nature, are not guarantees of future performance and involve risks and uncertainties, and other important factors that could cause actual developments or results to differ from those expressed or implied in these forward looking statements. These risks and uncertainties include those discussed or identified in fuller disclosure documents filed by Applus+ with the relevant Securities Markets Regulators, and in particular, with the Spanish Market Regulator, the Comisión Nacional del Mercado de Valores. Applus+ does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that the projected performance, conditions or events expressed or implied therein will not be realized. This document contains summarised information or information that has not been audited. In this sense this information is subject to, and must be read in conjunction with other publicly available information including if necessary any fuller disclosure document published by Applus+ . Nothing in this presentation should be construed as a profit forecast.

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Agenda

HI GHLI GHTS

FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK 2016

Fernando Basabe Chief Executive Officer

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Highlights

(1) Organic is at constant exchange rates (2) Operating profit, Operating profit margin, Operating cash flow and EPS are all adjusted for other results 4

  • Q2 revenue decline slower than Q1
  • Restructuring of the Energy & Industry division is on track
  • Automotive division won three tenders this year to date
  • H1 financial performance:
  • Revenue of €783.7 million down organic1 6.6% (reported -8.9%)
  • Operating profit2 of €70.6 million down organic1 13.1% (reported
  • 15.1%)
  • Operating profit2 margin of 9.0%, down 70 bps
  • Operating cash flow2 of €46.7 million, up 24.4%
  • EPS2 0.32 Euros per share, down -17.3%
  • Net debt/Ebitda ratio maintained (3.3x)
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Agenda

HIGHLIGHTS

FI NANCI AL REVI EW

BUSINESS REVIEW OUTLOOK 2016

Joan Amigó Chief Financial Officer

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H1 2016. Revenue Growth Bridge

EUR Million

(8.9)%

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H1 2016. Adjusted Operating Profit Growth Bridge

EUR Million

7

(15.1)%

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2016 2015 Change

Revenue

783.7 860.4 (8.9)%

  • Adj. Operating Profit

70.6 83.1 (15.1)%

Adj.Op.Profit margin

9.0% 9.7% ‐66 bps

PPA Amortisation

(23.8) (23.5)

Other results

(5.5) (8.7)

Operating profit

41.2 50.9 (19.1)%

Finance result

(11.4) (11.0)

Associates

0.9 1.0

Profit before tax

30.7 40.9 (24.9)%

Income taxes

(8.8) (10.8)

Net Profit

22.0 30.1 (27.2)%

Minorities

(4.4) (4.9)

Net Profit Group

17.6 25.2 (30.4)%

Adjusted Net Profit Group

41.4 50.0 (17.3)%

EPS in €

0.14 0.19 (30.4)%

Adjusted EPS in €

0.32 0.38 (17.3)% H1

H1 2016. Summary I ncome Statement

EUR Million

(1) Adj. Op. Profit stated as Operating Profit before amortisation of acquisition intangibles, Historical Management Incentive Plan, restructuring, impairment and transaction & integration costs (* ) The comparative figures for H1 2015 shown in the table above have been restated from those previously reported due to an increase in amortisation in acquisition intangibles by €0.8 million as permitted by International Financial Reporting Standards (IFRS) within a 12 month period of an acquisition. This is further explained in note 2.c of the Financial Statements presented as at 30 June 2016

(1)

8

(* )

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2016 2015 Change Adjusted EBITDA 95.0 108.0 (12.0)% (Increase) / decrease in working capital (23.4) (47.5) Capex (25.0) (22.9) Adjusted Operating Cash Flow 46.7 37.5 24.4%

Cash Conversion rate 49.1% 34.7%

Taxes Paid (12.4) (13.3) Interest Paid (5.6) (10.6) Adjusted Free Cash Flow 28.7 13.5 111.8% Extraordinaries (9.4) (3.2) Historical Management Incentive Plan (9.5) (11.0) Minorities (2.6) (3.3) Acquisitions / Disposals (2.1) (47.4) Others (0.3) 2.4 Cash Generated 4.9 (49.0) H1

H1 2016. Cash Flow

(1) Adjusted EBITDA is stated as Operating Profit before depreciation, amortisation and Other results (2) Includes €6 million for restructuring and €3.4 million for an adverse tax ruling (3) Cash generated pre-currency impact and change in financing. See Statutory Cash Flow reconciliation in Appendix

(1)

EUR Million

9

(2) (3)

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H1 2016. Net Debt – as defined by bank covenant (1)

EUR Million

(* ) LTM EBITDA includes proforma annual results from acquisitions (1) Stated at annual average rate (2) Others includes dividends to minorities, purchase of Restricted Stock Units and restructuring costs

Bank covenant for Net Debt to EBI TDA at < 4.5x until June 2017. Thereafter < 4.0x

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H1 2016. Currency Exposure

% Revenue by Actual Currency

(2)

(1) None above 5% (2) Includes currencies pegged to USD

  • Significant

change in currency mix due to the growth in Spain, drop in North America and depreciation in emerging markets

(1)

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Jan ‐ Jun 2016 Jan ‐ Jun 2015 Change USD 1.12 1.12 0.1% GBP 0.78 0.73 (5.6)% CAD 1.49 1.38 (7.3)% ARS 15.97 9.84 (38.4)% COP 3493.30 2768.55 (20.7)% Average FX Exchange rates vs Euro

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Agenda

HIGHLIGHTS FINANCIAL REVIEW

BUSI NESS REVI EW

OUTLOOK 2016

Fernando Basabe Chief Executive Officer

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Spain 19% Rest of Europe 29% North America 19% LatAm 9% Asia Pacific 12% Middle East & Africa 12%

Oil & Gas 40% Statutory Vehicle Inspection 19% Automotive OEM 11% Power 8% Construction 5% Other 17% Energy & Industry 66% Laboratories 4% Auto 19% Idiada 11%

H1 2016. Revenue Distribution

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By Division By Geography By End Market

(46% )* (18% )* (9% )* (7% )* (3% )*

* H1 2015

(17% )* (70% )* (3% )* (18% )* (9% )* (17% )* (27% )* (21% )* (9% )* (12% )* (14% )*

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Applus+ Energy & I ndustry (I )

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Revenue

  • Adj. Op. profit

(14.5)% (29.5% )

66%

Revenue

41%

Adj.Op. Profit

  • Oil & Gas revenue down double digit with market conditions remaining

challenging

  • Power, Construction, Telecom, Aerospace and other end markets continue

performing well growing at mid single digits

  • Restructuring and tight cost control remains a priority mitigating the

margin impact

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Applus+ Energy & I ndustry (I I )

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  • North America (25% of division revenue): continues to be hardest hit although

Q2 revenue decline was less than Q1. The fire in Fort McMurray negatively impacted Q2

  • LatAm

(10%): good end market diversification (power, telecom, civil infrastructure, oil & gas) and ramp up in new countries has supported high single digit growth

  • Northern Europe (18%): negatively impacted by reduced activity in the North

Sea and fewer refinery shut downs. The recurrent opex business is stable

  • Southern Europe, Africa, Middle East, Asia & Pacific (47%):
  • Double digit growth in Spain. Italy performing well winning new global

vendor surveillance and technical staffing projects

  • Africa and Middle East continues to suffer from reduction in scope on a

major African oil project. Excluding this, revenue was stable with two key contracts in Oman and Saudi Arabia extended to end of year

  • Asia Pacific lower revenue due to offshore projects ending
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Applus+ Laboratories

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  • Strong performance continues across all business lines
  • Industrial labs, (40% of division revenue), performing well with Aerospace

and Auto (electrical and emc1) testing leading the growth

  • Strong growth in Construction (15% of division revenue), especially fire

testing of Spanish manufactured building products destined for export

  • Margin improved by 210 bps

(* ) LY restated on a constant currency basis (1) Electromagnetic compatibility

4%

Revenue

3% Adj.Op. Profit

Eur Million H1 2016 H1 2015 Proforma (*) H1 2015 Revenue 28.5 26.6 26.9

% Change 7.0% 5.9%

  • Adj. Op. Profit

2.7 1.9 2.0

% Change 39.5% 34.7%

Margin 9.5% 7.3% 7.4%

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Applus+ Automotive (I )

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(* ) LY restated on a constant currency basis

  • Good revenue growth offset by material negative Fx impact in Argentina
  • Lower margin due to higher than usual tender activity, start up costs on the

new contracts and revenue mix

  • Ireland had significant growth due to market size increase and investment in

increased capacity

  • Spain overall was steady with varied regional performances
  • LatAm performing well. Chile concession renewal process on going

19%

Revenue

42% Adj.Op. Profit

Eur Million H1 2016 H1 2015 Proforma (*) H1 2015 Revenue 151.7 146.3 151.7

% Change 3.7% (0.0)%

  • Adj. Op. Profit

35.3 34.9 36.5

% Change 1.2% (3.4)%

Margin 23.3% 23.8% 24.1%

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Applus+ Automotive (I I )

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  • US below last year mainly due to temporary delay on the Illinois state budget

approval

  • Denmark grew well with increased market share whilst Finland continues to

decline

  • New 10 year programme in Argentina expected to start in Q4 (annual

revenue of €8m after ramp up)

  • New tenders won year to date, due to commence in 2017/18:
  • Uruguay: €5m annual revenue – 5 years
  • Chile: €2m annual revenue – 8 years
  • Massachusetts: €6m annual revenue – 6+ 3+ 3+ 3 years
  • Supreme Court judgement on the Catalonia programme in line with European

Court of Justice. No further developments

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Applus+ I DI ADA

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(* ) LY restated on a constant currency basis

  • Strong growth in revenue and profit due to increased customer investments

in new vehicle models, technology, safety, regulations and outsourcing

  • Passive safety, chassis powertrain and the German and Chinese market are

the key drivers of the growth

  • The proving ground in Spain is close to full capacity; the new proving ground

in China expected to start in October

14% Adj.Op. Profit 11% Revenue

Eur Million H1 2016 H1 2015 Proforma (*) H1 2015 Revenue 86.3 76.4 77.1

% Change 12.9% 11.9%

  • Adj. Op. Profit

11.5 10.6 10.4

% Change 9.0% 10.5%

Margin 13.4% 13.8% 13.5%

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Agenda

HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW

OUTLOOK 2016 Fernando Basabe Chief Executive Officer

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  • We are on track to meet the guidance for 2016:
  • Organic revenue down mid single digit at constant rates
  • Margin to continue under pressure
  • Continued strong cash flow generation

Outlook

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H1 2016. Adjustments to Statutory results

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EUR Million

EUR Million

  • Adj. Results

Other results Statutory results

  • Adj. Results

Other results Statutory results Revenue 783.7 ‐ 783.7 860.4 ‐ 860.4 (8.9)% Ebitda 95.0 (5.5) 89.5 108.0 (6.2) 101.8 (12.0)% Operating Profit 70.6 (29.3) 41.2 83.1 (32.2) 50.9 (15.1)% Net financial expenses (11.4) 0.0 (11.4) (11.0) 0.0 (11.0) Share of profit of associates 0.9 0.0 0.9 1.0 0.0 1.0 Profit Before Taxes 60.1 (29.3) 30.7 73.2 (32.2) 40.9 (17.8)% Income tax (14.3) 5.5 (8.8) (18.2) 7.4 (10.8) Non controlling interests (4.4) 0.0 (4.4) (4.9) 0.0 (4.9) Net Profit 41.4 (23.8) 17.6 50.0 (24.8) 25.3 (17.3)% Number of Shares 130,016,755 130,016,755 130,016,755 130,016,755 EPS, in Euros 0.32 0.14 0.38 0.19 (17.3)% H1 2016 H1 2015 +/‐ % Adj. Results

(* ) The comparative figures for Statutory H1 2015 shown in the table above have been restated from those previously reported due to an increase in amortisation in acquisition intangibles by €0.8 million as permitted by International Financial Reporting Standards (IFRS) within a 12 month period of an acquisition. This is further explained in note 2.c of the Financial Statements presented as at 30 June 2016

(* )

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H1 2016. Revenue and Adj. Op. Profit by Division

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EUR Million

Organic Inorganic FX Total Energy&Industry Division 517.1 (12.3)% 0.5% (2.7)% (14.5)% 604.5 Laboratories 28.5 7.0% (1.2)% 5.9% 26.9 Auto 151.7 3.7% (3.7)% (0.0)% 151.7 Idiada 86.3 12.9% (0.9)% 11.9% 77.1 Holding&others 0.1 (10.0)% (4.3)% (14.4)% 0.1 Total Revenue 783.7 (6.6)% 0.4% (2.7)% (8.9)% 860.4

Actual 2015

Growth Revenue

Actual 2016

Organic Inorganic FX Total Energy&Industry Division 33.7 (29.2)% 1.7% (1.9)% (29.5)% 47.8 Laboratories 2.7 39.5% (4.8)% 34.7% 2.0 Auto 35.3 1.2% (4.6)% (3.4)% 36.5 Idiada 11.5 9.0% 1.4% 10.5% 10.4 Holding&others (12.6) (7.2)% (0.0)% (7.3)% (13.6) Total Adj. OP. Profit 70.6 (13.1)% 1.0% (3.0)% (15.1)% 83.1

  • Adj. Op. Profit

Actual 2016

Growth

Actual 2015

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Q1 & Q2 2016. Revenue by Division and Adj. Op. Profit

25

EUR Million

Q1 Q2

Organic Inorganic FX Total Energy&Industry Division 243.7 (14.0)% 0.3% (1.9)% (15.6)% 288.8 Laboratories 13.5 5.0% (0.6)% 4.4% 12.9 Auto 75.3 2.7% (4.5)% (1.8)% 76.7 Idiada 43.8 15.5% (0.9)% 14.6% 38.2 Holding&others 0.0 n/a n/a n/a 0.1 Total Revenue 376.3 (7.6)% 0.2% (2.3)% (9.7)% 416.7

  • Adj. Op. Profit

25.8 (16.7)% 2.9% (3.5)% (17.4)% 31.2 Growth

Actual 2015

Revenue

Actual 2016

Organic Inorganic FX Total Energy&Industry Division 273.4 (10.7)% 0.8% (3.5)% (13.4)% 315.8 Laboratories 15.0 8.9% (1.7)% 7.2% 14.0 Auto 76.4 4.7% (2.9)% 1.8% 75.0 Idiada 42.5 10.3% (0.9)% 9.3% 38.8 Holding&others 0.1 n/a n/a n/a 0.0 Total Revenue 407.3 (5.6)% 0.5% (3.2)% (8.2)% 443.6

  • Adj. Op. Profit

44.8 (10.9)% (0.2)% (2.5)% (13.7)% 51.9 Revenue Growth

Actual 2015 Actual 2016

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Q1 & Q2 2016. Summary I ncome Statement

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EUR Million

2016 2015 Change 2016 2015 Change

Revenue

376.3 416.7 (9.7)% 407.3 443.6 (8.2)%

  • Adj. Operating Profit

25.8 31.2 (17.4)% 44.8 51.9 (13.7)%

Adj.Op.Profit margin

6.9% 7.5% ‐64 bps 11.0% 11.7% ‐71 bps

PPA Amortisation

(11.9) (11.6) (11.9) (11.9)

Other results

(2.8) (3.5) (2.8) (5.1)

Operating profit

11.1 16.0 (30.6)% 30.1 34.9 (13.8)%

Finance result

(5.9) (4.5) (5.5) (6.5)

Associates

0.4 0.5 0.5 0.5

Profit before tax

5.6 12.1 (53.4)% 25.1 28.9 (13.0)% Q1 Q2

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H1 2016. Other results

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EUR Million 2016 2015 Change Other results (5.5) (8.7) (36.0)% Transaction costs (0.1) (1.2) Other gains & losses 0.0 (1.2) Historical Management Incentive Plan (5.5) (6.2) H1

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H1 2016. Net Financial Expenses

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EUR Million H1 2016 H1 2015 Interest on Post‐IPO Debt Facility (7.2) (9.5) Arrangement Fees (1.0) (0.9) Foreign exchange (2.0) 1.0 Financial derivatives for hedging 0.0 0.0 Other (1.1) (1.6) Financial Expenses (11.4) (11.0)

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H1 2016. Net Financial Debt

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H1 2015 FY 2015 H1 2016 Term Loan

727.9 747.8 747.1

RCF

35.0 20.0 ‐

Other Financial Debt

78.3 66.7 43.0

Total Gross Debt 841.1 834.5 790.1 Net cash

(126.2) (169.2) (121.6)

Total Net debt 714.9 665.3 668.5 LTM EBITDA

216.2 212.8 199.6

Net Debt to EBITDA 3.3 x 3.1 x 3.3 x

EUR Million

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CF Statement Restructuring Impacts Historical Mgmnt Incentive Plan Others Add Back capex & interests Non cash items Statutory CF Staturory CF equivalent epigraph Adjusted EBITDA 95.0 (0.2) (5.5) (0.3) (58.3) 30.7 Profit Before taxes Non cash items 58.3 58.3

Non cash items

Working Capital variation (23.4) (5.8) 2.6 (26.5)

(Increase)/Decrease in working capital

Capex (25.0) 25.0 ‐ Adjusted Operating Cash Flow 46.7 (6.0) (2.9) (0.3) 25.0 ‐ 62.5

Cash Conversion rate 49.1%

Taxes Paid (12.4) (3.4) (15.8)

Taxes Paid

Interest Paid (5.6) 5.6 ‐ Adjusted Free Cash Flow 28.7 (6.0) (2.9) (3.7) 30.6 ‐ 46.7 Operating Cash Flow Capex & Interests ‐ (30.6) (30.6)

Capex & Interest paid

Extraordinaries (9.4) 6.0 3.4 ‐ Historical Mgmnt. Incentive Plan (9.5) 9.5 ‐ Minorities (2.6) (2.6)

Minorities

Acquisitions / Disposals (2.1) (2.1)

Acquisitions/Disposals of subsidiaries

Others (0.3) 0.3 0.0 Cash Generated 4.9 ‐ 6.6 ‐ ‐ ‐ 11.5 Curency translations (10.0) (10.0)

Currency translations

Changes in financing (37.9) (6.6) (44.5)

Changes in financing

Cash increase (decrease) (42.9) ‐ ‐ ‐ ‐ ‐ (42.9) Cash Increase / (Decrease)

H1 2016. Statutory Cash Flow reconciliation

30

EUR Million

(* )

(* ) Adverse tax ruling

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H1 2016. Balance Sheet

31 H1 2016 FY 2015 H1 2016 FY 2015 Equity 650.1 651.3 Goodwill 528.2 528.0 Long Term Provisions 23.9 28.9 Other intangible assets 555.2 581.5 Bank borrowings 739.3 767.4

PPA 504.5 528.5

Other financial liabilities 24.4 24.0

Other intangible assets 50.7 53.0 Deferred Tax Liabilities PPA 120.6 126.2

Tangible assets 206.7 209.2

Deferred Tax Liabilities Others 35.3 35.1

Non current Financial Assets 14.6 14.0 Deferred Tax Liabilities 155.9 161.3 Deferred Tax Assets 85.7 85.4 Other non current liabilities 10.0 13.2 Total Non‐Current Assets 1,390.4 1,418.1 Total Non‐Current Liabilities 953.5 994.8 Inventories 9.5 10.1 Short term provisions 1.9 1.9 Trade & Other receivables 423.3 420.5 Bank borrowings 28.1 52.5 Corporate Income Tax assets 11.5 12.3 Trade & Other payables 294.5 303.1 Current financial assets 4.1 4.3 Income Tax Liabilities 16.7 15.7 Cash & Cash equivalents 119.5 162.4 Other current liabilities 13.5 8.4 Total Current Assets 567.9 609.6 Total Current Liabilities 354.7 381.6 Total Assets 1,958.3 2,027.7 Total Equity & Liabilities 1,958.3 2,027.7

EUR Million